Merchant Shipping (Pollution) Bill [Lords - Standing Committee A

[Janet Anderson in the Chair]

Merchant Shipping (Pollution) Bill [Lords]

Janet Anderson: Will all Members please ensure that mobile phones, pagers and so on are turned off or on silent mode during the sitting? If Members wish to remove their jackets, although I suspect that this morning they probably will not, that is in order. We come first to the programme motion, on which debate may continue for half an hour.

Stephen Ladyman: I beg to move,
That—
(1) during proceedings on the Merchant Shipping (Pollution) Bill [Lords] the Standing Committee shall (in addition to its first meeting at 10.30 a.m. on Tuesday 7th February) meet—
(a)at 4.00 p.m. on Tuesday 7th February;
(b)at 9.00 a.m. and 1.00 p.m. on Thursday 9th February;
(2) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 4.00 p.m. on Thursday 9th February.
Welcome to the Chair, Mrs. Anderson. This is my first opportunity to serve under your chairmanship, and I am looking forward to it. We have put together not only a distinguished but a suitably heavyweight Committee to discuss this important Bill. I welcome Committee members and also look forward to working with them. The Bill is, I hope, non-controversial, but it needs to be properly scrutinised, and the programme motion gives us more than adequate time to do that.

Julian Brazier: I, too, look forward to serving with this distinguished Committee under you, Mrs. Anderson, in what I think will be a well-tempered sitting. I thank the Minister for his recent letter, which put some of the Second Reading debate into a slightly different light. However, we shall return to that matter as Committee deliberations develop. The Opposition have no problem with the programme motion.

Question put and agreed to.

Janet Anderson: I remind the Committee of the money resolution and the Ways and Means resolution connected with the Bill. Copies of the resolutions are available in the room. I also remind Members that adequate notice should be given of amendments. As a general rule, I do not intend to call starred amendments.

Clause 1 - Power to give effect to revisions of the international arrangements relating to compensation for oil pollution from ships

Julian Brazier: I beg to move amendment No. 2, in clause 1, page 2, line 10, after ‘way’, insert
‘which shall require proof of intent or proof of reckless conduct.’.
Clause 1(4)(d), the context of amendment No. 2, will
“create summary offences or offences triable either way (but subject to the limitation that the Order may not authorise the imposition, on conviction on indictment, of a term of imprisonment exceeding two years)”.
We are concerned that the breadth of the clause will allow Ministers to implement directive 2005/35/EEC on the basis of a statutory instrument alone. That will criminalise the accidental discharge of oil.
On Second Reading, I mentioned concerns raised with us by a number of outside bodies about the idea of criminalising merchant seamen when there was no intent or even reckless disregard. Since then, further representations have been made. A joint press release issued by Lloyd’s Register of Shipping, the International Salvage Union, the Greek Shipping Cooperation Committee and the International Association of Independent Tanker Owners, or Intertanko, said that
“the Directive already has had a detrimental effect on the morale of seamen, and ... this will have adverse implications for the retention and recruitment of high quality crews.”
Hans van Rooij, president of the International Salvage Union, has also made the point that salvage companies are the last line of defence against catastrophic pollution: if a directive introduces the serious negligence concept, salvors will have no choice but to seek immunity before intervening in the waters of EU states, with their reputation for aggressive behaviour in maritime accident situations. I do not have to underline the point that if salvage crews become reluctant to intervene, a bad pollution situation might get rapidly worse, compounding the problem.
On Second Reading, I paid tribute to the promotion, by the tonnage tax that the Government have introduced, of a recovery in the tonnage of our merchant shipping. However, the fact remains that no significant recovery has taken place in the merchant navy’s officers and crews, serving under the British flag. The numbers have hardly changed. I have given two relevant examples, but there is other verbal testimony about this: the measure will have a real effect on people’s willingness to join the merchant navy and serve on vessels.
Effectively, under the provision, somebody who is held to be negligent in respect of an oil discharge can be convicted. Ministers will have the power to introduce a statutory instrument, with the small amount of scrutiny involved in that, which could result in seafarers being sent to prison for up to two years for an accident involving oil, even when there was not reckless disregard, let alone intent. The distinction, of course, is that reckless disregard means behaving sufficiently stupidly—for example, getting drunk on  watch—that it must be obvious to the person concerned that there is a risk to safety or, in the case that we are considering, a risk of pollution.
In my view, that is not something that anyone in the shipping world will welcome, and I do not believe for a moment that it will mean less pollution. In producing the relevant directives, the EU’s approach has perhaps been coloured by the fact that there was first a French and then a Spanish Commissioner. They were from the two countries that have had the worst experience of oil pollution. I do not mean that in a petty “little Englander” sense, but there is a real worry that, in their desperation to prevent another accident of that sort, they have lost the plot.
The way to prevent oil pollution is to have vessels properly operated by good, well-trained seafarers. Discouraging good-quality people from joining the seafaring profession and allowing, as will inevitably happen, more oil to be handled by crews from countries that may operate under flags without proper insurance—the Minister’s letter acknowledged that we have no way of checking, and of course we do not, that a vessel transiting our waters has proper insurance—is not the way to promote safety on vessels or to prevent pollution.
It appears that, in any case, such measures and the EU’s demands conflict with the international convention for the prevention of pollution from ships, known as the MARPOL convention, which explicitly exempts accidental discharges. The provision will put us in an absurd conflict with our international obligations.
This is a modest little amendment. All it would do is restrict the powers of the Minister to make regulations so that they applied only to cases involving either intent or reckless disregard. Given that he made some sympathetic noises on Second Reading, I hope he feels able to accept it.

Stephen Ladyman: I am unable to accept the amendment, but I understand the hon. Gentleman’s underlying concerns. First, I also acknowledge that although tonnage tax has been a huge success, it has not yet brought the benefits of increased UK employment at sea that I expected. I intend to do something about that and am working closely with the Chamber of Shipping, unions, shipowners and so on to find ways to increase the number of people employed on British ships.
The hon. Gentleman is absolutely right in that if we are working across the industry, in all the different sectors, to increase the number of British people employed at sea, and at the same time introducing unfair penalties or criminalising people for acts that are not deliberate or reckless, we will put people off going into seafaring. If that happens, at the end of a generation we will find that all our onshore maritime industries, which are worth many billions of pounds to the British economy, no longer have the people with the necessary experience of sea life, and we will lose those industries as well. We will lose not only jobs at sea, but, ultimately, an incredibly valuable sector of British industry.
I entirely agree with the hon. Gentleman’s theme, although I disagree with him on some points. The Bill is fundamentally about compensation arrangements, so any offence it creates must also relate to compensation arrangements. I can guarantee that our intention is not to introduce any offence that penalises seafarers in the way he has described.
The case involving Intertanko, which the hon. Gentleman referred to, relates to directive 2005/35/EC, which requires member states to put in place sanctions against the discharge of oil. In other words, the directive deals with people who release oil into the environment, and sanctions to prevent them from doing that. The Bill is about compensation arrangements, so offences of the sort to which he refers fall outside the scope of the Bill.
When that directive was being negotiated, we made our views clear, and our constant policy was, as with all European Union legislation with respect to maritime affairs, to ensure that legislation is made at international, rather than EU, level. Any EU legislation that we must have should be entirely compatible with international legislation. That was our position on the directive, which has been agreed, and we are in the process of transposing it to UK law. However, the directive deals with different circumstances from the ones dealt with in the Bill, which is purely about compensation arrangements.

Julian Brazier: It would perhaps be helpful if the Minister made it clear what offences his advisers say fall within the scope of the Bill.

Stephen Ladyman: One that immediately comes to mind might relate to a requirement that shipowners take adequate steps to ensure that they have the funds to contribute to the compensation fund. That might be an offence of the sort that is covered, but if any more come to mind in the next few minutes, perhaps I will give them to the hon. Gentleman when we debate clause stand part.
I can give one categorical assurance: any offences that we introduce under the Bill will not be of the category to which the hon. Gentleman is referring. We will ensure that they do not put inappropriate pressure on British mariners and that they relate only to the compensation regime, rather than to the acts covered by the EU directive.

Julian Brazier: I am grateful to the Minister for being generous in giving way, as he always is. However, the assurance he is giving is not quite the one that we need in order to not press the matter to a Division. There is one crucial question. Is he telling us that parliamentary counsel says that such offences will not fall within the scope of the Bill? Unless he can give us that assurance, there will still seem to be no reason for not accepting our amendment, which would prevent any future Government—there might be a Minister who is less sympathetic and knowledgeable on the subject than he—from introducing such offences.

Stephen Ladyman: Clause 1 is concerned solely with liabilities that are governed by international laws, and specifically the strict liability of the shipowner for pollution damage caused by persistent oil, whatever the cause. In most cases, the shipowner is able to limit his liability and must also obtain insurance to meet that limit. There are no offences for causing pollution in the underlying civil liability convention, the existing UK provisions implementing the oil pollution compensation regime or the supplementary fund protocol. The only offences required under the regime are already in place and concern failure to carry evidence of insurance or failure to report annual oil receipts for the purpose of calculating contributions to the International Oil Pollution Compensation Fund or the supplementary fund. The offences that the hon. Gentleman describes are not appropriate to the Bill and offences for penalising people are out of its scope.

Julian Brazier: I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Julian Brazier: We support the clause wholeheartedly. It will achieve a much needed improvement to the fund, although, as the Minister acknowledged, the scale of these tragedies, sadly, has moved on. We may yet, as he hinted, need a supplement to the supplement. The clause none the less will increase the fund available to compensate for an oil spill from £160 million to £600 million and involves the speedier application of the fund to clean up after a spill.
I shall not detain the Committee by reading out the absolutely horrendous table provided for us by the Royal Society for the Protection of Birds on bird deaths resulting from recent oil spills. I shall simply give one example. The RSPB believes that the sinking of the Prestige off the Spanish coast killed more than 750,000 birds. The damage to the local ecology is severe in many cases and permanent in some.
You very kindly said, Mrs. Anderson, that you would allow me in the stand part debate to touch just for a moment on new clause 2, which you understandably chose not to select. It proposed:
“Within one year of the passing of this Act, the Secretary of State shall bring forward proposals to establish Marine Environmental High Risk Areas.”
In looking at the clause and the whole business of compensation to deal with the after effect of these spills, we must keep in the back of our minds the importance of preventing them in the first place. We know the Government are committed to these environmental high-risk areas because they have said so many times, but nothing has happened.
We are all aware that the device of calling for an annual report is used simply to get a debate on an issue. It is disappointing that there is still no progress on the designation of these areas and steps to ensure that tankers do not pass close to them. Bodies such as the RSPB and others that deal with the ecology of our coastline—not only in relation to birdlife, but as an  asset for the population to visit and enjoy—are concerned about this. I want to give the Minister the opportunity to say how he sees the Government proceeding on this and whether that side of the equation will be addressed before very long.

Stephen Ladyman: I am happy to respond to that point. The Secretary of State and I discussed marine environment high-risk areas not an hour ago in talking about when we will make the announcement. I can assure the hon. Gentleman that, although I am not in a position to tell him exactly today, he will very shortly have all the answers he wants about how we intend to deal with the matter.
I explained in some detail on Second Reading what the clause will do. As the hon. Gentleman said, it is at the very heart of the Bill. Unless other hon. Members have questions to ask me, I do not think that it is necessary for me to go through it again. The clause will allow us to make an Order in Council to join a fund that will make a significantly large amount of compensation available to people or British interests when their property and rights are damaged by pollution. The legislation is essential; we are currently exposed, and I have not heard anybody argue that it is not appropriate for us to move rapidly to bring it into effect.
The key point on such clauses that always interests Committees is where affirmative and negative resolutions will be used. Where an Order in Council relates only to the supplementary fund protocol, or is made under subsection (4)(b), the negative resolution procedure will apply. Any other Order in Council made under the Bill will be subject to the affirmative resolution procedure. Not only is the legislation important, but there is adequate protection for Parliament to consider the matters involved should it wish to do so.

Robert Goodwill: Has the Department analysed the effectiveness of the current compensation scheme? I read yesterday that three years after the Prestige disaster, only 15 per cent. of the money that could have been allocated has been, because of the difficulty of ascertaining the long-term environmental impact. In the short term, that means that much important environmental work in Galicia has not taken place.

Stephen Ladyman: That is exactly right, and it is why we need the legislation before us. Compensation payments are held up for so long because, as soon as there is doubt whether the pot of money will be enough to meet everybody’s needs, it becomes difficult to provide people even with interim payments, because we know that they will get only so many pennies on the pound. If more money is given out than people will ultimately be able to get, there will be difficulty in getting money back. That means that money cannot be given out until the totality of the damage is known. That is what happened with past disasters.
Although I take the point that the hon. Member for Canterbury (Mr. Brazier) made, to which I referred on Second Reading, events have to some extent overtaken us while we have been negotiating the international  treaty. There have been accidents that would have exceeded even this pot of money, although thankfully not by much. I hope that such events will be very rare, and in the case of almost any accident that happens on our shores there will be sufficient money available to meet all the compensation. That will mean that compensation, or at least interim payments, can be given much more quickly so that people can be paid to get on with fixing the problems that the pollution has caused.

Anthony D Wright: On the point about clearing up, there was an incident just over 20 years ago in which the Eleni V ran aground off the coast at Great Yarmouth in my constituency. The local authority was landed with a hefty bill and did not get compensation until three to four years later. What will the position be in that circumstance? Will a local authority, for instance, be able to access funds more or less immediately, rather than have to wait?

Stephen Ladyman: It is difficult for me to give my hon. Friend a precise answer, because I do not know what the claim was for in that case or the legal niceties of the matter, but I can tell him that, in principle, that will be the position under the new legislation. People who have incurred a loss through pollution should be able to get their money much more quickly—as soon as possible after an accident has happened, I hope.
I remind the Committee that in the last few weeks there has been another accident in the channel—the one that affected the Ece. We hope and believe that, thankfully, it will not have a significant long-term environmental impact, but it demonstrates that the risks are with us, and the quicker we get the legislation on the statute book, the better.

Question put and agreed to.

Clause 1 ordered to stand part of the Bill.

Clauses 2 and 3 ordered to stand part of the Bill.

Clause 4 - Short title, commencement and extent

Stephen Ladyman: I beg to move amendment No. 1, in clause 4, page 3, line 14, leave out subsection (4).
The amendment simply removes the standard clause that is inserted by the Lords to cover matters of privilege. Removing it is a routine process.

Amendment agreed to.

Clause 4, as amended, ordered to stand part of the Bill.

New Clause 1 - Supplementary fund protocol: annual report on ratification

‘The Secretary of State shall publish and lay before Parliament annually a report on progress towards full ratification of the Supplementary Fund Protocol.’. —[Mr. Brazier.]

Brought up, and read the First time.

Julian Brazier: I beg to move, That the clause be read a Second time.
A moment ago, the Minister alluded to the two ships that were involved in a collision in the channel last week. Both vessels were flying flags of convenience. As it happens, the Marshall Islands and Malta are two of the more responsible flag-of-convenience states, but neither is a full member of the supplementary fund or its protocol, although I understand that both are in the bottom tier.

Stephen Ladyman: I did try to cover this on Second Reading. There was a reference from, I think, one of the hon. Gentleman’s colleagues concerning the Marshall Islands. The comment implied some criticism of the Marshall Islands, but, without having the white list to hand immediately, I was unable to restore its reputation. I want to put the record straight: since that debate, I have checked the position and the Marshall Islands is relatively high on the white list, as well as a very responsible flag.

Julian Brazier: I hope I made that point, but the Marshall Islands is not a signatory to the protocol we are discussing. The new clause asks that the Secretary of State publish, and lay annually before Parliament, a report on progress towards ratification of the supplementary fund protocol. So, although I do not wish to attack the Marshall Islands, I want to make it clear that there is concern among those on the Opposition Benches that there are free riders.
Let me go back to the exchange on Second Reading and the Minister’s letter. I made the point that there are free riders in the system, and the Minister intervened to say that it is a statutory requirement to have insurance. Subsequently, he made clear what I think we knew anyway, which is that there is, of course, no way to ensure that all vessels are insured when they cross our waters or come near to our coastline if, as is often the case, they are not visiting a British port.
That point is peripheral, however, because we are dealing with large spills that insurance cannot cover, and the point of the Bill is to cover them. For those purposes, countries on the white list of flags of convenience such as the Marshall Islands are just as much free riders as those that are less responsible.
There are 32 flag-of-convenience countries, one of which, Liberia, has 7.5 per cent. of the world’s fleet. More than half the ships lost in the last few years—by tonnage, nearly two thirds—came from flag-of-convenience states. Putting that in plain English, although flags of convenience may account for less than a quarter of the world’s shipping, they account for the bulk of the potential problems dealt with in the Bill, yet they are free-riding on the system. They pay nothing into it, yet they are supported by the rest.
As I said, the device of calling for an annual report simply enables us to put it on the record and draw the Committee’s attention to the fact that the problem exists. More could be done to put pressure on these ships. I do not suggest for a moment that Her  Majesty’s Government can police it on their own, but through our respected and powerful membership of international bodies and through the EU we could surely do more to put pressure on the freeloaders. It is extraordinary that Malta, an EU member, has not signed the protocol; I do not know whether there are others.
In the last resort, surely it is not beyond the means of man for the EU to say that in a certain number of years, if a reasonable period of notice is given, we will stop accepting visits from ships from countries that do not sign the protocol. That might be a possible way of addressing the matter.

Stephen Ladyman: I encourage the hon. Gentleman to be cautious before he criticises other members of the EU who have not ratified the protocol. We have not ratified it yet, and that is why we are here. We can hardly criticise others if they are going through the same process as we are in respect of the time scale.

Julian Brazier: I am grateful for the Minister’s intervention. He can correct me if I am wrong, but my understanding is that Malta is still on the first tier; we are talking about ratifying the third tier. What about the second tier, which we ratified a long time ago? I am happy to give way to the Minister again if I am mistaken on that point.
Malta has a relatively small register compared to that of Liberia or of Panama, but the practical point is that all EU members should by now have signed up for the second tier and should be considering signing the third tier, the supplementary fund protocol to which has been referred.
I have probably said as much as there is to say on the issue. This worthwhile Bill sets up a framework that will ensure that more money is available for larger spills. It will cover the concern of hon. Members on both sides of the House of Commons to ensure that the problems are addressed in a more timely fashion. It seems extraordinary, however, that so little is being done to pick up the freeloaders who are most likely to cause the problems in the first place, and I look forward to hearing what the Minister plans to do about it.

Stephen Ladyman: I hope that the hon. Gentleman can be persuaded to withdraw the new clause. It would be a shame if the Committee had to divide on any part of the Bill, which has the Committee’s agreement.
I understand the hon. Gentleman’s point about what he calls freeloaders, but I remind him that if a state does not become part of the agreement and does not pay into it, it cannot benefit from it either. Our citizens will benefit from the fund if there are any problems; irrespective of who causes the pollution a compensation regime will be available to us. We have very limited scope, of course, for forcing others to join an international agreement. We need to convince them and work with them.
Many of the flags of convenience that the hon. Gentleman referred to are considering whether to become signatories to the agreement. The day after  Second Reading a detailed article appeared in Lloyd’s List; it had approached several such states and asked them their intentions. Broadly speaking most of them said that they were considering whether to join. We must encourage them and work with them. Diplomacy is the only tool that we have. The first step in encouraging them, with some credibility, is to become members. It is important to get the Bill on the statute book. I promise the hon. Gentleman that we will then use all our powers to encourage those states to join, and will be as persuasive as we can.
We shall remind our European colleagues that in March 2004 at the Transport Council it was agreed that all EU states should become members. We shall press them to move ahead as rapidly as they can.
As to reporting on the matter and the specific effect of the new clause—

Julian Brazier: Before the Minister goes on to talk about reporting, may I ask a question? He says that the news about the EU is welcome. Almost every vessel—every oil tanker, in this case—that transits our waters is heading for an EU port, often one of ours or a port in one of the Low countries or the Scandinavian countries. What is to stop the Government pressing the EU to take slightly stronger steps than diplomacy in the case of those countries which prove reluctant to sign up?

Stephen Ladyman: One thing to stop us is that the price of petrol would go through the roof. We should have to turn off the lights early every day and close factories, because if we refused to accept foreign-flagged ships simply because of a failure to sign the protocol we should not get the fuel and goods that we need to come into the country. There would have devastating effects on economic competitiveness in the European Union. The only way forward is persuasion and encouragement of the various states to join.
I remind the hon. Gentleman that it has taken more than 25 years for the International Oil Pollution Compensation Fund to reach 98 states, as members. It is not expected that membership of the supplementary fund protocol will be as broad as for the IOPC fund, but it is for individual states to decide whether they want to join. If they do not join, they will not have to contribute, but on the other hand they will not benefit.
I want to comment on the idea of our reporting on this matter. The IOPC secretariat already publishes an annual report containing details of the states that have joined the regime each year, as well as a great deal of useful information on oil spills that have occurred, and the compensation that has been paid. There is far more information in it than we could reasonably include in a report to Parliament. I hope that the hon. Gentleman will therefore agree that the information that he requests is already put annually in the public domain.
I hope, too, that the hon. Gentleman will accept my assurance that once we are members of the fund we shall use all the influence that that gives us, and our leadership in maritime affairs. We are seen by most people as the leading maritime nation. The International Maritime Organisation is in London and the IOPC is based there. Every shipowner in the world  has a base in London. We are seen as leaders in the area; we are pursuing several initiatives at the moment, such as encouraging the take-up of e-navigation and compliance with the IMO’s audit scheme, in which context we were the first nation to put ourselves forward for audit and the first to say that once the audit report has been reviewed and we have decided what to do with it we will put it into the public domain. In terms of the quality agenda and ensuring that accidents do not happen, there is no question but that we are leading the world. We will continue to lead. We will continue to use all our diplomatic skill to encourage other states to sign up to this fund too. With that assurance, I hope the hon. Gentleman will withdraw his new clause.

Julian Brazier: In two respects I find the Minister’s answer uncharacteristically unconvincing. First, he repeated something that he said on Second Reading, which is that somehow or other only those people who are signed up to this measure will benefit from it. I cannot get my head around that: the people who will benefit from this are the communities who are devastated by oil slicks. As far as I know, neither Liberia nor Panama is particularly at risk from oil slicks. Liberia is not next to a busy shipping run, although Panama has the canal with the huge cargo traffic through it.
The people who benefit are the communities, not the people who operate the registers. If once again off some part of our coastline we have one of these dreadful tragedies involving, for example, a Liberian tanker, the money will be there, even though it was Liberian, but Liberia will not have contributed to the fund. It seems a nonsensical argument. This has been set up for the benefit of the people who suffer from the oil spills, not those who pay into it from the registers. I cannot see that there is any possible argument there to induce the Liberians, for example—I mention them because they are a particularly big one—to sign up.
The other point that I found odd in the Minister’s argument was the scare scenario of factories closing and the idea that we would blockade our ports. Nobody has suggested that. What we could do, collectively with the EU and on a timescale of many years, because we have three tiers to encourage people into, is to use a little bit of coercion and our huge lobbying power, gradually to push the shipowners in this direction. After all, that approach was used by earlier generations to get a reasonable standard of safety on foreign registered ships. I do not intend to push this matter to a vote as I do not particularly want to have it against my name that I pressed for an annual piece of paper. Nevertheless, I found the Minister’s answer rather disappointing.

Stephen Ladyman: May I rise to the defence of Liberia? Although it is not part of the supplementary fund yet—it may consider it—it is 10th on the white list. The Liberians are good guys. The hon. Gentleman should not bandy Liberia’s name about as if every Liberian tanker that comes through British waters is a rust bucket. That is certainly not the case. Liberia is in the first division and we should give it credit for that.
I should point out that the report that the hon. Gentleman seeks as a mechanism for encouraging us to encourage others in this respect is provided by the IOPC. I repeat again my assurance that we will use our diplomatic skills to encourage everybody to sign up to the fund.

Julian Brazier: I am pleased with the positive note that the Minister produced at the end of his remarks. In the new-found spirit of cross-party co-operation, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Bill, as amended, to be reported.

Committee rose at fourteen minutes past Eleven o’clock.